Back 12.05.2017

Making the Switch – from fossil fuel subsidies to sustainable energy

A new report from Gaia and IISD finds that redirecting fossil fuel subsidies toward the clean energy transition could help climate vulnerable countries reap major savings while slashing greenhouse gas emissions.

According to the study produced for the Nordic Working Group for Global Climate Negotiations (NOAK), developing countries already undergoing energy reforms would especially benefit from SWAPs—the transfer of funds that normally go towards fossil fuel subsidies into sustainable energy investment, such as renewable energy and energy efficiency. The report also presents examples of how Nordic countries have managed this switch – or SWAP.

“The subsidy reform would allow renewable and efficient energy solutions to takeoff and facilitate the switch towards a world less dependent on fossil fuels” says Paula Tommila, Business Manager at Gaia.

As part of the study, roadmaps for four countries, Bangladesh, Indonesia, Morocco and Zambia, were produced to identify potential and practical means for making SWAP a reality.

“The examples from these countries show that savings gained from removing fossil fuel subsidies could be redirected or swapped to help fund a clean and just energy transition around the world”.

Fossil fuel subsidies are a cost that governments can no longer afford to ignore from both economic and social perspectives. Global subsidies to both consumers and producers of fossil fuels were reported at USD 425 billion in 2015. Research estimates suggest that removing all consumer fossil fuel subsidies would decrease global carbon emissions anywhere between 6.4–8.2 per cent by 2050. By reinvesting these savings into renewable energy, energy efficiency, education, health care, and targeted social protection schemes for adaptation to climate change, countries have major opportunities to support the delivery of the both the Paris Agreement and the Sustainable Development Goals.

“Current subsidies to fossil fuel from governments are worth around half the funding needed to bridge the global energy access gap, to double renewable energy and energy efficiency rates by 2030,” said Laura Merrill, Senior Researcher and Operations Manager with IISD.

These subsidies are three times higher than current global subsidies for renewable energy, and continue to distort energy markets.

The report is available here.

Further information

  • Paula Tommila, Business Manager, +358 40 538 4813,
  • Laura Merrill, GSI Operations Manager and Senior Policy Adviser at Institute of Sustainable Development (IISD) Global Subsidies Initiative (GSI): +41 79 818 9483
  • Heidi Orava, Nordic Co-operation,

Video by IISD Reporting Services, produced by Tasha Goldberg and filmed/edited by Chege Herman Njoroge.